Case Law Details
Virender Rathee Vs ITO (ITAT Delhi)
Introduction: The case of Virender Rathee vs. ITO (ITAT Delhi) revolves around an appeal filed by the assessee against the order of the ld CIT(A), National Faceless Appeal Centre (NFAC) dated 19.01.2023 for AY 2018-19. The dispute is related to the taxability of interest received from enhanced compensation due to the compulsory acquisition of agricultural land.
Analysis: The appellant argues that the interest received on enhanced compensation should be treated as accretion to the value of land and not as taxable interest. They cite various rulings and court judgments in their favor. The revenue authorities, on the other hand, rely on contrary judgments and hold the interest as taxable under ‘Income from other sources.’
The ITAT Delhi bench, after careful consideration, rules in favor of the appellant, stating that the interest on enhanced compensation is tax-free under section 10(37) if the transfer is of agricultural land.
Conclusion: The ITAT Delhi’s verdict in Virender Rathee vs. ITO case provides clarity on the tax treatment of interest received from enhanced compensation in compulsory acquisition of agricultural land. The decision aligns with previous rulings and legislative intent, allowing the appellant to claim tax deduction on the entire interest amount received.
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